Late payment may come back to bite you: late-payment interest at record high
On 1 January 2023, the Belgian legislator made the usual adjustment to the applicable interest rates (see here). Spurred by inflation, these rates have soared to highs not seen in many years. The ‘ordinary’ statutory interest rate was raised to 5.25 % for 2023 and the interest rate for commercial transactions to 10.50 % for the first semester of 2023.
1. LEGAL INTEREST RATE
In civil matters and in commercial matters that do not qualify as commercial transactions (e.g. a B2C-transaction between a trader and a private individual), the legal interest rate is determined on an annual basis according to the market interest rate. For 2023, it was set at 5.25 %.
This amounts to a significant increase compared to previous years. Over the past decade, the statutory interest rate fluctuated between 2.75 % and the record low of 1.50 %, which was attained last year. The current interest rate of 5.25 % thus represents more than a threefold increase compared to the previous level and a historic high. To find similar values one has to go back all the way to 2009 – in the aftermath of the financial crash of 2008.
Historical overview of the legal interest rate
|
PERIOD |
Interest rate (Law of 5 May 1865 on the loan against interest (BOG 7 May 1865)) |
|
From 1 January 2023 (/) |
5.25 % |
|
From 1 January 2022 (BOG 1 March 2022) |
1.50 % |
|
From 1 January 2021 (BOG 12 February 2021) |
1.75 % |
|
From 1 January 2020 (BOG 27 January 2020) |
1.75 % |
|
From 1 January 2019 (BOG 14 January 2019) |
2.00 % |
|
From 1 January 2018 (BOG 11 January 2018) |
2.00 % |
|
From 1 January 2017 (BOG 27 January 2017) |
2.00 % |
|
From 1 January 2016 (BOG 18 January 2016) |
2.25 % |
|
From 1 January 2015 (BOG 30 January 2015) |
2,50 % |
|
From 1 January 2014 (BOG 18 January 2014) |
2,75 % |
|
From 1 January 2013 (BOG 18 January 2013) |
2,75 % |
|
From 1 January 2012 (BOG 18 January 2012) |
4.25 % |
|
From 1 January 2011 (BOG 18 January 2011) |
3.75 % |
|
From 1 January 2010 (BOG 15 January 2010) |
3.25 % |
|
From 1 January 2009 (BOG 16 January 2009) |
5.50 % |
|
From 1 January 2008 (BOG 15 January 2008) |
7.00 % |
|
From 1 January 2007 (BOG 17 January 2007) |
6.00 % |
|
From 1 September 1996 (Royal Decree 4 August 1996, BOG 30 July 1996) |
7.00 % |
|
From 1 August 1986 (R.D. 16 July 1986, BOG 30 July 1986) |
8.00 % |
|
From 1 August 1985 (R.D. 17 July 1985, BOG 23 July 1985) |
10.00 % |
|
From 1 August 1981 (R.D. 28 July 1981, BOG 8 August 1981) |
12.00 % |
|
From 1 November 1974 (R.D. 14 October 1974, BOG 19 October 1974) |
8.00 % |
|
From 1 July 1970 (Law 30 June 1970, BOG 24 July 1970) |
6.50 % |
2. LEGAL INTEREST RATE FOR COMMERCIAL TRANSACTIONS
For any commercial transaction carried out in exchange for payment, the semi-annual adjustment of the interest rate is based on the European Central Bank’s benchmark rate in accordance with article 5 of the law of 2 August 2002 on combating late payments in commercial transactions (Belgian Official Gazette of 07/08/2002). Under this law, a “commercial transaction” denotes any transaction between undertakings (B2B) or between undertakings and public authorities leading to remunerated activities such as delivery of goods, provision of services or the design and the performance of public works as well as building and civil engineering works. The interest rate for arrears in trade transactions had stabilized at 8 % ever since the second semester of 2016. As from January 1st, 2023 it was raised to 10.50 %. More than ever, there is a viable commercial incentive for undertakings to charge the conventional interest rate on arrears. Late-payment interest effectively starts to accrue upon expiry of the statutory (in principle 1 month) or contractual payment term.
As a reminder: on February 1st, 2022 the more stringent provisions of the law of 14 August 2021 amending the law of 2 August 2002 on combating late payment in commercial transactions entered into force. As a result, the measures against late payment in commercial transactions applicable since 2002 were revised and reinforced. Among other things, these now stipulate that the conventional payment term in commercial transactions may never exceed 60 days.
Historical overview of the legal interest rate for commercial transactions
|
PERIOD |
Interest rate (Law of 2 August 2002 on combating late payments in commercial transactions (BOG 7 August 2002)) |
|
From 1 January 2023 |
10.50 % |
|
From 1 July 2016 till 31 December 2022 |
8.00 % |
|
From 1 July 2015 till 30 June 2016 |
8.50 % |
|
From 1 July 2013 till 30 June 2015 (for contracts concluded, renewed or extended on or after 16 March 2013) |
8.50 % |
|
From 1 July 2013 till 30 June 2015 (for contracts concluded before 16 March 2013) |
7.50 % |
|
From 1 January 2013 till 30 June 2013 (for contracts concluded, renewed or extended on or after 16 March 2013) |
9.00 % |
|
From 1 January 2013 till 30 June 2013 (for contracts concluded before 16 March 2013) |
8.00 % |
|
From 1 January 2012 till 31 December 2012 |
8.00 % |
|
From 1 July 2011 till 31 December 2011 |
8.50 % |
|
From 1 July 2009 till 30 June 2011 |
8.00 % |
|
From 1 January 2009 till 30 June 2009 |
9.50 % |
|
From 1 July 2007 till 31 December 2008 |
11.50 % |
|
From 1 January 2007 till 30 June 2007 |
11.00 % |
|
From 1 July 2006 till 31 December 2006 |
10.00 % |
|
From 1 July 2003 till 30 June 2006 |
9.50 % |
|
From 1 January 2003 till 30 June 2003 |
10.00 % |
|
From 7 August 2002 till 31 December 2002 |
10.50 % |
